Trade deficit jumped 14.1% in March

posted at 10:41 am on May 10, 2012 by Ed Morrissey

Looks like Goldman Sachs has the right perspective on first-quarter growth, although perhaps not the right amplitude. Earlier this week, GS warned investors that the Q1 GDP estimate would drop to 1.9% based on limited warehouse inventory expansion, but that the trade numbers for March might push it down even further. Today, the Commerce Department announced that the trade deficit jumped by 14.1%, thanks to a surge of imports that will push estimated growth further downward:

The U.S. Census Bureau and the U.S. Bureau of Economic Analysis, through the Department of Commerce, announced today that total March exports of $186.8 billion and imports of $238.6 billion resulted in a goods and services deficit of $51.8 billion, up from $45.4 billion in February, revised. March exports were $5.3 billion more than February exports of $181.5 billion. March imports were $11.7 billion more than February imports of $226.9 billion.

In March, the goods deficit increased $6.5 billion from February to $67.6 billion, and the services surplus increased $0.1 billion from February to $15.8 billion. Exports of goods increased $4.7 billion to $132.7 billion, and imports of goods increased $11.3 billion to $200.3 billion. Exports of services increased $0.5 billion to $54.1 billion, and imports of services increased $0.4 billion to $38.3 billion.

That isn’t entirely bad news, of course. A rise in exports is good news in and of itself. However, the rise in imports outpaced the exports, both in goods and services, and in just about every category as well:

Service exports rose faster than imports, but not by much ($500 million to $400 million, respectively). That’s not enough to dent the rapid increase in imbalance, obviously.

Reuters reports this with its favorite U-word in the headline, and notes that this will almost certainly impact the Q1 GDP revision due in two weeks:

A separate report showed the U.S. trade deficit widened more than expected in March as imports surged to a record high, in another sign the government may have to scale back its estimate of first-quarter economic growth.

The trade gap grew 14.1 percent to $51.8 billion, the biggest jump in nearly a year, even though exports also hit a record high, a Commerce Department report showed on Thursday.

Economists polled by Reuters had expected the trade gap to widen to about $50 billion.

The bigger-than-expected rise follows government data on Wednesday that showed wholesale inventories grew less than expected in March, leaving analysts to conclude the government would likely lower its first-quarter estimate of gross domestic product from the 2.2 percent rate it reported last month.

There is another bright spot in this report. It may show demand picking back up in March, although that would be in conflict with the worst-in-three-years factory orders and durable-goods reports for the same month. We’ll have to wait a couple of weeks to get those reports for April to see which direction they take.

95% of voters have no idea what a trade deficit is and it has 0 impact on their voting choices.

albill on May 10, 2012 at 10:56 AM

And 95% of HotAir readers cannot describe the linkage between our accounts deficit and budget deficit.

The US trade deficit has ballooned over the past 15 years and no one is seriously talking about leveling the playing field so that American manufacturers can compete in global markets. Or simply opening markets that are unfairly closed or restricted to US companies in tech and other high growth industries.

A rise in imports means Americans bought more. Granting the lousy economy and Obama’s general wrongness on everything, a rise in imports is not a bad thing on principle.

The rise in imports was apparently not due to a surge in oil imports, according to the report Ed cites. Were customers buying things they couldn’t get in the US? Things that were too expensive if made in the US? How did the rise in imports compare to the overall picture of comparable sales inside America? Did imported purchases rise faster?

Those are the things I would want to know before deciding this is bad news. Meanwhile, if we want to export more, the top thing we need to do is stop making it so expensive to hire the American worker. The worker doesn’t even see most of what makes him or her so comparatively expensive. The government collects it from the employer!

If America gets any more of PBHO’s economic recovery we will need to start launching money into space because we’ve run out of room to store it here on Earth.

This is what success looks like, thank you Dear Leader for your wisdom and guidance.

Bishop on May 10, 2012 at 10:55 AM

Not sure what you’re talking about.
US consumers start buying more foreign electronics and other imports whenever its economically possible. The trade deficit goes up when people start spending money on discretionary purchases.

It is easy to see that our very own poster “Touchdown Budha” is a shill for the administration- so presented without further ado is his “educated analysis” of the true situation:

“we are monitoring closely. statistics for next month are sure to improve. we are holding with our call for a steadily improving economy. the export numbers show very good progress. the huge trade deficit is simply transitory. this is a soft patch. all will be well.”

The US trade deficit has ballooned over the past 15 years
bayam on May 10, 2012 at 11:01 AM

thank you Mr. Clinton, for taxing the crap out of our corporations and sending them overseas.

upinak on May 10, 2012 at 11:04 AM

Were those jobs sent overseas to Germany? If you think that the US can lower taxes (which many corporations hardly pay) to keep jobs from going to third world countries, you really don’t understand the cost equation. US workers cannot compete with $1.50 hourly wages and never will.

It’s true that Clinton and the GOP are to blame for a trade deal which the Chinese have broadly violated (primarily after a leadership change).

The only solace anyone can gain from this nightmare is that it will be over come Jan 2013. Sure Rommeny is not what we wanted, but the Obumbler will be an ex-president and the new Jimmy Carter. I’ll take what I can get.

The US trade deficit has ballooned over the past 15 years and no one is seriously talking about leveling the playing field so that American manufacturers can compete in global markets.

bayam on May 10, 2012 at 11:01 AM
This is only a true statement if one sticks his head in the sand and ignores what conservatives have been saying about reducing corporate taxes for the last how many years?

dominigan on May 10, 2012 at 11:16 AM

GOP has tried, but frankly they’ve just been linguini-spined and folded each time the libs screamed at them.

It’s not just the trade deficit that has jumped under Democratic “leadership”. Annual deficits have jumped, too. The total national debt when Democrats took majority control on January 3, 2007 was $8,677,214,255,313.07 ($8.677 Trillion)

According to the U.S. Department of the Treasury, Bureau of the Public Debt, the total national debt on May 8, 2012 was $15,685,726,985,716.47 ($15.686 Trillion).

Under Democratic “leadership” for the last 5 and 1/3 years, the total national debt has risen over $7 Trillion dollars.

By the time we seat the new Congress (and hopefully a new President) in January, the total national debt will have increased more than $8 Trillion (almost DOUBLING the total national debt) in just 6 years of majority Democrat control.

Only thing I can think of is like when I send a PCB (printed circuit board) design to Thailand to be manufactured because its $0.25 per sq inch versus $4 per sq inch here in the USA. And thats what we are up against due to NAFTA, taxes and trade. Thats why NOTHING electronic is made here, and ALL parts come from china.

We’re not as concerned about this report – there are many factors that make up this imbalance. With the slowdowns in China and Europe, plus the strength of the US dollar, it is not surprising we are buying more of their stuff they are buying ours. It may result in a downgrade in the 1Q12 GDP number, but again there are other factors in that first GDP estimate that may offset this. Overall, it appears that the American consumer is buying, and buying foreign-made goods. We continue the slow climb out.

I remember back in the days of Reagan this economic item was absolutely HAMMERED day after day by the LSM. The ‘Trade Deficit Is’ again and again. And continued with GHWB … but with Clinton … ahhh, not so much.
But data is data and if I am to believe a report that will reflect the economy … European machine tool orders were DOWN by 10% for Q1. And Dear Liar & Sgt. Dumbass say ‘same sex marriage’ is an important issue.
And the LSM is asking Romney what about that, or legalizing pot or some other witless crap.
If I were to generate a list of “stuck on stupid” … I’d have to top it with our ‘Agenda Driven Journalist’ population. We are so screwed.